SEBI Extends Relaxation on Physical Copies of Financial Statements

In a recent circular dated October 6, 2023, the Securities and Exchange Board of India (SEBI) has provided issuers who have listed Non-Convertible Securities with a limited relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This circular comes as a response to the evolving circumstances and extends the relaxation granted by SEBI regarding the dispatching of physical copies of financial statements.

Background

1. Regulation 58(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, stipulates that a listed entity is required to send a hard copy of the statement containing the salient features of all the documents, as specified in Section 136 of the Companies Act, 2013, and the rules made thereunder to those holders of non-convertible securities who have not registered electronically.

2. SEBI had previously relaxed the provisions of Regulation 58(1)(b) through Circular no. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated May 12, 2020, following relaxations by the Ministry of Corporate Affairs (MCA) on May 5, 2020. Subsequently, SEBI granted further extensions based on MCA relaxations through the following circulars:

a) Circular no. SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated January 15, 2021, extending the relaxation until December 31, 2021;

b) Circular no. SEBI/HO/DDHS/P/CIR/2022/0063 dated May 13, 2022, extending the relaxation up to December 31, 2022; and

c) Circular no. SEBI/HO/DDHS/RACPOD1/CIR/P/2023/001 dated January 05, 2023, dated September 30, 2023, extending the relaxation up to September 30, 2023.

3. The Ministry of Corporate Affairs (MCA) issued a circular on September 25, 2023, extending, among other things, the relaxation from dispatching physical copies of financial statements (including the Board’s report, Auditor’s report, or other documents required to be attached) until September 30, 2024.

SEBI’s Decision

In light of the MCA’s recent extension of relaxation until September 30, 2024, SEBI has decided to provide a corresponding relaxation for issuers of non-convertible securities. Therefore, the requirements of Regulation 58(1)(b) of the SEBI Listing Regulations are relaxed up to September 30, 2024.

This relaxation aims to ease the compliance burden on issuers and aligns with the extended timeline provided by the MCA for dispatching physical copies of financial statements.

Effective Date

The circular issued by SEBI will come into effect immediately upon its publication.

Instructions to Stock Exchanges

SEBI has instructed all stock exchanges to communicate the provisions of this circular to all entities with listed non-convertible securities. Additionally, stock exchanges are required to disseminate this information on their websites for wider awareness and compliance.

Conclusion

The SEBI circular dated October 6, 2023, extends the relaxation from compliance with certain provisions of the SEBI Listing Regulations concerning the dispatch of physical copies of financial statements for issuers of non-convertible securities. This extension, aligned with the Ministry of Corporate Affairs’ decision, provides issuers with more time to comply with these requirements, aiming to reduce administrative burdens during these times. Issuers and relevant stakeholders are advised to take note of this regulatory change and ensure compliance within the extended timeline until September 30, 2024.

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Securities and Exchange Board of India